Interim Results - Part 3 of 3
Aviva PLC
04 August 2004
PART 3 OF 3
Statistical supplement
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PAGE 40
Segmental analysis of Group operating profit* at constant currency - achieved profit basis
6 months
2003
at 2004
6 months exchange 6 months
2004 rates 2003
£m £m £m
Life achieved operating profit
United Kingdom 356 339 339
France 114 90 90
Ireland 18 31 31
Italy 34 33 33
Netherlands (including Belgium and Luxembourg) 129 69 69
Poland 33 35 40
Spain 78 71 71
Other Europe 7 2 2
International 31 29 30
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800 699 705
====================================================================================================================
Health
United Kingdom 3 4 4
France 2 3 3
Netherlands 28 20 20
--------------------------------------------------------------------------------------------------------------------
33 27 27
-===================================================================================================================
Fund Management
United Kingdom 3 5 5
France 8 6 6
Other Europe 3 - -
Australia 3 (1) (1)
--------------------------------------------------------------------------------------------------------------------
17 10 10
====================================================================================================================
General insurance
United Kingdom 408 313 313
France 13 15 15
Ireland 68 43 43
Netherlands 23 12 12
Other Europe 18 16 16
Canada 59 (32) (33)
Other 24 21 21
--------------------------------------------------------------------------------------------------------------------
613 388 387
====================================================================================================================
Non-insurance operations (15) (47) (47)
Corporate costs (94) (56) (56)
Unallocated interest charges - external (124) (94) (94)
- intra-group (100) (104) (104)
--------------------------------------------------------------------------------------------------------------------
Group operating profit before tax* 1,130 823 828
====================================================================================================================
* Group operating profit before tax, before amortisation of goodwill and exceptional items. All operating profit is
from continuing operations.
Restating 2003 modified statutory life profits to account for the impact of exchange rate movements in 2004 would
result in modified statutory life profits being restated from £515 million to £511 million for the six months to
30 June 2003.
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PAGE 41
Supplementary analyses
(a) Non-insurance operations - operating result
6 months 6 months Full year
2004 2003 2003
£m £m £m
Hill House Hammond 1 6 4
Norwich Union Equity Release* and other personal finance subsidiaries (7) (9) (16)
Your Move 8 (6) 1
Norwich Union Life Services (15) (27) (54)
Other (2) (11) 1
--------------------------------------------------------------------------------------------------------------------
(15) (47) (64)
====================================================================================================================
* The operating result from our equity release business in the UK is included within the non-insurance results on a
statutory basis. On an achieved profit methodology new business contribution was £5 million before tax (30 June
2003: £12 million; 31 December 2003: £19 million) and operating profit before tax, including the benefits of the
securitisation of our book, was £21 million (30 June 2003: £22 million; 31 December 2003: £31 million) which is
excluded from our results.
(b) Pension schemes
The Group continues to account for its pension costs in accordance with SSAP24. The table below sets out the carrying
value of the pension scheme prepayment in the Group's balance sheet under the principles of SSAP24 and the valuation of
the pension schemes liabilities under the requirements of FRS17.
30 June 31 December
2004 2003
£m £m
Pension scheme prepayment on SSAP24 basis 276 251
====================================================================================================================
Valuation of the pension schemes on a FRS17 basis, after
deduction of related deferred tax (521) (583)
====================================================================================================================
(c) Investments in joint ventures
30 June 30 June 31 December
2004 2003 2003
£m £m £m
Share of gross assets 1,796 1,401 1,416
Share of gross liabilities (1,537) (1,306) (1,226)
--------------------------------------------------------------------------------------------------------------------
259 95 190
Loans to joint ventures 827 669 679
--------------------------------------------------------------------------------------------------------------------
1,086 764 869
====================================================================================================================
As part of their investment strategy, the UK long-term business policyholder funds have invested in a number of
property limited partnerships (PLPs) through a mix of capital and loans. The PLPs are managed by general partners (GPs)
in which the UK long-term business shareholder companies hold equity stakes, and which themselves hold nominal stakes
in the PLPs. Most of the PLPs have raised external debt, secured on their respective property portfolios. The lenders
are only entitled to obtain payment, of both interest and principal, to the extent that there are sufficient resources
in the respective PLPs. The lenders have no recourse whatsoever to the policyholder or shareholders' funds of any
company of the Aviva Group. Accounting for the PLPs depends on the shareholdings in the GPs and the terms in each
partnership agreement. Where the partnership is managed by a contractual agreement such that no one party exerts
control, the PLPs have been accounted for as joint ventures.
In addition, the Group has invested in a joint venture life assurance company in China, which commenced operations on
1 January 2003. These shares are held by Aviva plc at a cost of £22 million (31 December 2003: £22 million) and share
of net assets of £16 million (31 December 2003: £18 million).
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PAGE 42
(d) Longer-term investment return
The longer-term investment return is calculated separately for each principal general insurance business and certain
long-term business operations. In respect of equities and properties, the return is calculated by multiplying the
opening market value of the investments, adjusted for sales and purchases during the year, by the longer-term rate of
investment return. The longer-term rate of investment return is determined using consistent assumptions between
operations, having regard to local economic and market forecasts of investment return. The allocated longer-term
return for other investments is the actual income receivable for the year.
The principal assumptions underlying the calculation of the longer-term investment return are:
Longer-term rates of return
Equities Properties
-------------- ---------------
2004 2003 2004 2003
% % % %
United Kingdom 8.1% 8.1% 6.6% 6.6%
France 7.5% 7.5% 6.5% 6.5%
Ireland 8.7% 8.7% 6.7% 6.7%
Netherlands 8.4% 8.4% 6.5% 6.5%
Canada 9.3% 9.3% 7.3% 7.3%
The table below shows the sensitivity in the changes in the longer-term rates of return on the annual operating profit:
Movement in investment return By Change in By
--------------- --------------------------------- ----
Equities 1% higher/lower Group operating profit before tax £31m
Properties 1% higher/lower Group operating profit before tax £8m
(e) General business - investment return information
Actual investment return Longer-term investment return
------------------------------ -------------------------------
6 months 6 months Full year 6 months 6 months Full year
2004 2003 2003 2004 2003 2003
£m £m £m £m £m £m
United Kingdom 310 295 585 341 303 626
Europe (excluding UK)
France 16 19 37 19 22 44
Ireland 29 28 58 32 29 65
Netherlands 10 28 71 24 15 40
Other 12 12 20 20 20 38
International
Canada 46 44 94 55 52 110
Other 16 16 36 17 17 42
--------------------------------------------------------------------------------------------------------------------
Total longer-term investment return 508 458 965
Total actual investment income 439 442 901
Realised (losses)/gains (6) 26 47
Unrealised (losses)/gains (193) 151 136
--------------------------------------------------------------------------------------------------------------------
Total actual investment return 240 619 1,084 508 458 965
====================================================================================================================
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PAGE 43
Reconciliation between general business investment return information and short-term fluctuation in investment return
incorporated in the summarised consolidated profit and loss account - modified statutory basis
For the six months to 30 June 2004
Short-term
Actual Longer-term fluctuation
investment investment in investment
return return return
£m £m £m
General business 240 508 (268)
Health business 14 31 (17)
--------------------------------------------------------------------------------------------------------------------
254 539 (285)
--------------------------------------------------------------------------------------------------------------------
Life business (1)
--------------------------------------------------------------------------------------------------------------------
Total short-term fluctuation in investment return (286)
====================================================================================================================
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PAGE 44
General insurance - geographical ratio analysis
Combined operating
Claims ratio Expense ratio ratio
------------------ ------------------ ------------------
6 months 6 months 6 months 6 months 6 months 6 months
2004 2003 2004 2003 2004 2003
% % % % % %
United Kingdom 65.9% 66.0% 10.0% 10.5% 98% 99%
France 71.5% 71.7% 11.5% 11.9% 100% 100%
Ireland 68.6% 79.6% 10.0% 8.5% 88% 97%
Netherlands 58.7% 61.3% 14.5% 13.7% 94% 98%
Canada 69.1% 85.4% 12.2% 12.3% 99% 115%
--------------------------------------------------------------------------------------------------------------------
Group total 66.4% 69.9% 10.8% 10.9% 97% 101%
====================================================================================================================
Ratios are measured in local currency.
The total Group ratios are based on average exchange rates applying to the respective periods.
Definitions:
Claims ratio - Incurred claims expressed as a percentage of net earned premiums.
Expense ratio - Written expenses excluding commissions expressed as a percentage of net written premiums.
Commission ratio - Written commissions expressed as a percentage of net written premiums.
Combined
operating ratio - Aggregate of claims ratio, expense ratio and commission ratio.
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PAGE 45
General insurance - class of business analyses
(a) United Kingdom
Combined operating
Net written premiums Underwriting result ratio
-------------------- ------------------- ------------------
6 months 6 months 6 months 6 months 6 months 6 months
2004 2003 2004 2003 2004 2003
£m £m £m £m % %
Personal
Motor 690 657 14 (5) 102% 102%
Homeowner 509 467 18 21 97% 96%
Creditor 310 289 9 (1) 102% 102%
Other 46 41 (2) 1 99% 97%
--------------------------------------------------------------------------------------------------------------------
1,555 1,454 39 16 99% 100%
--------------------------------------------------------------------------------------------------------------------
Commercial
Motor 397 391 4 (2) 97% 100%
Property 436 410 35 5 90% 95%
Liability 210 177 (15) (17) 107% 109%
Other 76 64 4 8 92% 82%
--------------------------------------------------------------------------------------------------------------------
1,119 1,042 28 (6) 96% 99%
--------------------------------------------------------------------------------------------------------------------
£m 2,674 2,496 67 10 98% 99%
====================================================================================================================
During the six months to 30 June 2004, annualised rating increases were as follows: commercial liability: 15%;
commercial property: 8%; commercial motor: 2%; homeowners: 2%; and personal motor: 2%.
(b) France
Combined operating
Net written premiums Underwriting result ratio
-------------------- ------------------- ------------------
6 months 6 months 6 months 6 months 6 months 6 months
2004 2003 2004 2003 2004 2003
€m €m €m €m % %
Motor 213 205 - 3 99% 97%
Property and other 234 243 (9) (13) 101% 103%
--------------------------------------------------------------------------------------------------------------------
€m 447 448 (9) (10) 100% 100%
--------------------------------------------------------------------------------------------------------------------
£m 304 305 (6) (7) 100% 100%
====================================================================================================================
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PAGE 46
(c) Netherlands
Combined operating
Net written premiums Underwriting result ratio
-------------------- ------------------- ------------------
6 months 6 months 6 months 6 months 6 months 6 months
2004 2003 2004 2003 2004 2003
€m €m €m €m % %
Property 208 229 20 5 83% 93%
Motor 171 130 2 6 97% 95%
Liability 31 27 4 5 80% 75%
Other 91 48 (28) (20) 115% 142%
--------------------------------------------------------------------------------------------------------------------
€m 501 434 (2) (4) 94% 98%
--------------------------------------------------------------------------------------------------------------------
£m 341 295 (1) (3) 94% 98%
====================================================================================================================
(d) Canada
Combined operating
Net written premiums Underwriting result ratio
-------------------- ------------------- ------------------
6 months 6 months 6 months 6 months 6 months 6 months
2004 2003 2004 2003 2004 2003
C$m C$m C$m C$m % %
Automobile 929 844 (16) (202) 102% 125%
Property 395 356 34 1 91% 100%
Liability 117 110 (15) (3) 113% 103%
Other 19 19 7 4 70% 73%
--------------------------------------------------------------------------------------------------------------------
C$m 1,460 1,329 10 (200) 99% 115%
--------------------------------------------------------------------------------------------------------------------
£m 601 565 4 (85) 99% 115%
====================================================================================================================
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PAGE 47
Assets under management
General
Long-term business
business and other Group Group
30 June 30 June 30 June 31 December
2004 2004 2004 2003
£m £m £m £m
Financial investments
Shares, other variable yield securities and units in unit trusts 25,903 2,348 28,251 28,294
Strategic investments 1,479 451 1,930 2,026
Debt and fixed income securities at market value 36,233 9,734 45,967 47,048
Debt and fixed income securities at amortised cost 34,962 - 34,962 34,709
Loans secured by mortgages and other loans, net of
non-recourse funding 10,311 2,041 12,352 12,283
Deposits 3,158 744 3,902 2,943
Other investments 970 57 1,027 1,842
--------------------------------------------------------------------------------------------------------------------
Total financial investments 113,016 15,375 128,391 129,145
Investments in joint ventures 1,086 - 1,086 869
Investments in associated undertakings
and participating interests 653 149 802 1,043
Land and buildings 8,726 607 9,333 9,106
--------------------------------------------------------------------------------------------------------------------
Total investments 123,481 16,131 139,612 140,163
Assets held to cover linked liabilities 42,921 - 42,921 40,665
Other assets included in the balance sheet 14,046 13,581 27,627 27,852
--------------------------------------------------------------------------------------------------------------------
Total MSSB assets included in the balance sheet 180,448 29,712 210,160 208,680
Additional value of in-force long-term business 4,851 - 4,851 4,744
--------------------------------------------------------------------------------------------------------------------
Total EV assets included in the balance sheet 185,299 29,712 215,011 213,424
Third party funds under management:
Securitised mortgages (gross of non-recourse funding) 3,152 3,143
Unit trusts, Oeics, Peps and Isas 4,642 4,460
Segregated funds 19,607 19,355
--------------------------------------------------------------------------------------------------------------------
Total assets under management 242,412 240,382
====================================================================================================================
Strategic investments include the market value of the Group's shareholding in Societe Generale, Munchener
Ruckversicherungs-Gesellschaft, RBSG and UniCredito Italiano.
General insurance and other investments mix
Total
United Continental 30 June
Kingdom Europe International 2004
£m £m £m £m
Shares, other variable yield securities and units in unit
trusts and strategic investments 1,494 990 315 2,799
Debt and fixed income securities at market value 4,641 3,163 1,930 9,734
Land and buildings 264 310 33 607
Other 2,003 826 162 2,991
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Total investments 8,402 5,289 2,440 16,131
====================================================================================================================
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PAGE 48
Group capital structure
The Group maintains an efficient structure from a combination of equity shareholders' funds, preference capital,
subordinated debt and borrowings, consistent with the Group's risk profile and the regulatory and market requirements
of its business. The achieved profit basis provides a more accurate reflection of the performance of the Group's life
operations year on year than results under the modified statutory basis. Accordingly, the Group's capital structure is
analysed on an embedded value basis.
The Group's capital, from all funding sources, has been allocated such that the capital employed by trading operations
is greater than the capital provided by its shareholders and its subordinated debtholders. As a result, the Group is
able to enhance the returns earned on its equity capital.
Capital employed by segment
30 June 31 December
2004 2003
£m £m
Long-term savings 12,152 12,373
General insurance and health 4,505 4,481
Other business 581 725
Corporate 3,176 2,934
--------------------------------------------------------------------------------------------------------------------
Total capital employed 20,414 20,513
--------------------------------------------------------------------------------------------------------------------
Financed by
Internal debt 3,902 3,841
External debt 1,758 1,749
Subordinated debt 2,751 2,814
Shareholders' funds and minority interests 12,003 12,109
--------------------------------------------------------------------------------------------------------------------
20,414 20,513
====================================================================================================================
At 30 June 2004 the Group had £20.4 billion (31 December 2003: £20.5 billion) of total capital employed in its trading
operations which is efficiently financed by a combination of equity shareholders' funds, preference capital,
subordinated debt and internal and external borrowings.
In the first half of 2004, the total capital employed in our long-term savings operations decreased due to the positive
impact of retained earnings being offset by dividends paid to holding companies and the adverse effect of the Euro
foreign exchange rate movement. The total capital employed in our general insurance businesses increased due to
retained earnings partially offset by dividends paid to holding companies and foreign exchange losses.
In addition to its external funding sources, the Group has a number of internal debt arrangements in place. These have
allowed assets supporting technical liabilities to be invested into the pool of central assets for use across the
Group. They have also enabled the shareholders to deploy cash from some parts of the business to others in order to
fund growth. Although intra-group loans in nature, they are counted as part of the capital base for the purpose of
capital management. All internal loans satisfy arms length criteria and all interest payments have been made when due.
The ratio of the Group's external debt to shareholders' funds was 12% (31 December 2003: 12%). Interest cover, which
measures the extent to which external interest costs, excluding the subordinated debt interest, are covered by
achieved operating profit, was 30 times (31 December 2003: 19 times).
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PAGE 49
Group Capital Structure (continued)
Deployment of equity shareholders' funds
30 June 31 December
2004 2003
-------------------------------------------------- -----------
Fixed
income Other Other net
Equities securities investments assets Total Total
£m £m £m £m £m £m
Assets
Long-term savings 586 3,813 799 1,434 6,632 6,923
General insurance, health,
corporate and other business 2,799 3,281 1,130 - 7,210 7,035
--------------------------------------------------------------------------------------------------------------------
3,385 7,094 1,929 1,434 13,842 13,958
Goodwill 1,263 1,323
Additional value of in-force long-term business 5,309 5,232
--------------------------------------------------------------------------------------------------------------------
Assets backing total capital employed in
continuing operations 20,414 20,513
External debt (1,758) (1,749)
Internal debt (3,902) (3,841)
Subordinated debt (2,751) (2,814)
--------------------------------------------------------------------------------------------------------------------
12,003 12,109
Minority interests (949) (944)
Preference capital (200) (200)
--------------------------------------------------------------------------------------------------------------------
Equity shareholders'funds 10,854 10,965
====================================================================================================================
Our exposure to equities has decreased from £3.6 billion at 31 December 2003 to £3.4 billion, which represents 17% of
our capital employed. The Group has certain equity investments which are classified as strategic. The market values
of these holdings and the percentage of issued share capital of these companies held by the Group, in both our
shareholder and policyholder funds, is as follows.
% of issued share
Market value capital
--------------------- ----------------------
30 June 31 December 30 June 31 December
2004 2003 2004 2003
£m £m % %
Societe Generale 224 233 1.1% 1.1%
Munchener Ruckversicherungs-Gesellschaft 371 403 2.7% 2.6%
The Royal Bank of Scotland Group 848 854 1.7% 1.8%
UniCredito Italiano 487 536 2.8% 2.8%
--------------------
1,930 2,026
====================
Return on capital employed
6 months Full year
2004 2003
------------------------------------- ---------
Normalised Opening Return on Return
after-tax equity capital on
return capital (annualised) capital
£m £m % %
Long-term savings 557 12,373 9.2% 10.4%
General insurance and health 419 4,481 19.6% 16.4%
Other business 1 725 0.3% (7.9%)
Corporate (23) 2,934 (1.6%) (1.5%)
--------------------------------------------------------------------------------------------------------------------
954 20,513 9.5% 9.5%
Borrowings (162) (8,404) 3.9% 4.3%
--------------------------------------------------------------------------------------------------------------------
792 12,109 13.5% 12.9%
Minority interests (70) (944) 15.4% 17.6%
Preference capital (9) (200) 8.5% 8.5%
--------------------------------------------------------------------------------------------------------------------
Equity shareholders' funds 713 10,965 13.4% 12.7%
====================================================================================================================
The return on capital is calculated as the after-tax return on opening equity capital, based on operating profit,
including life achieved profit, before amortisation of goodwill and exceptional items.
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PAGE 50
Group capital structure (continued)
Capital management
In managing its capital, the Group aims to:
(i) match the profile of its assets and liabilities, taking account of the risks inherent in each business. In the
case of the Group's life operations, which have long-term liabilities, the majority of capital is held in fixed
income securities. A significant proportion of the capital supporting the Group's general insurance and health
operations is held in equities, reflecting the relatively low risk profile of these businesses;
(ii) maintain financial strength to support new business growth and satisfy the requirements of its policyholders,
regulators and rating agencies;
(iii) retain financial flexibility by maintaining strong liquidity, including significant unutilised committed credit
lines, and access to a range of capital markets;
(iv) allocate capital efficiently to support growth and repatriate excess capital where appropriate; and
(v) manage exposures to movement in exchange rates by aligning the deployment of capital by currency with the
Group's capital requirements by currency.
An important aspect of the Group's overall capital management process is the setting of target risk-adjusted rates of
return for individual business units, which are aligned to performance objectives and ensure that the Group is focused
on the creation of value for shareholders.
Risk based capital
The Group uses risk based capital as one of several measures to assess its capital requirements for its general
insurance businesses. Financial modelling techniques enhance our practice of active capital management, ensuring
sufficient capital is available to protect against unforeseen events and adverse scenarios, and risk management. Our
aim continues to be the optimal usage of capital through appropriate allocation to our businesses.
The introduction of FSA's Prudential Source Book includes the requirement to calculate the realistic capital needed
to meet adverse situations, the Internal Capital Assessment (ICA). Based on this we will agree specific risk adjusted
capital requirements with our regulator for both our life and general insurance businesses. Our risk based capital
model underpins our ICA modelling, and will form the basis of our discussions with the regulator in agreeing such
capital requirements, along with our strong risk management processes. We continue to develop our risk based capital
modelling capability for both our life and general insurance businesses as part of our longer-term development
programme for more complex risk modelling techniques, and increasingly operate our business by considering economic and
risk based capital requirements.
Our current risk based capital methodology for general insurance business assesses insurance, market and credit risks
and makes prudent allowance for diversification benefits. We look at the level of capital necessary to enable the
general insurance business to meet the statutory minimum solvency margin over a five year period with 99% probability
of not requiring further capital. We consider risks over a five year period allowing for planned levels of business
growth. Based on our model, our risk based capital requirement may be expressed as 34% of net written premiums.
Capital employed in our general insurance and health business after goodwill and adding back the claims equalisation
reserve was £4.6 billion at 30 June 2004 and required capital on a risk basis was £3.3 billion, giving a surplus
capital position of £1.3 billion.
Sensitivity analysis
The sensitivity of the Group's shareholders' funds at 30 June 2004 to a 10% fall in global equity markets or a rise of
1% in global interest rates is as follows:
Interest
31 December 30 June Equities rates
2003 2004 down 10% up 1%
£bn £bn £bn £bn
12.4 Long-term savings(1) 12.2 11.7 12.2
8.1 General insurance and other 8.2 8.0 7.9
(8.4) Borrowings(2) (8.4) (8.4) (8.4)
--------------------------------------------------------------------------------------------------------------------
12.1 Shareholders' funds 12.0 11.3 11.7
====================================================================================================================
(1) Assumes achieved profit assumptions adjusted to reflect revised bond yields.
(2) Comprising internal, external and subordinated debt.
(3) These sensitivities assume a full tax charge/credit on market value appreciation/falls.
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PAGE 51
Group capital structure (continued)
Shareholders' funds, including minority interests
30 June 2004 31 December 2003
Closing shareholders' funds Closing shareholders' funds
-------------------------------- ----------------------------------
Note MSSB net Internally MSSB net Internally
assets generated Embedded assets generated Embedded
(note 1) AVIF value (note 1) AVIF value
£m £m £m £m £m £m
Life assurance
United Kingdom 2,748 2,765 5,513 2,844 2,829 5,673
France 1,017 483 1,500 1,068 381 1,449
Ireland 332 204 536 338 216 554
Italy 354 74 428 386 56 442
Netherlands (including Belgium
and Luxembourg) 1,520 833 2,353 1,621 777 2,398
Poland 118 229 347 146 250 396
Spain 268 210 478 266 189 455
Other Europe 168 36 204 174 26 200
International 565 17 582 568 20 588
---------------------------------------------------------------------------------------------------------------------
7,090 4,851 11,941 7,411 4,744 12,155
Participating interests 2 211 - 211 218 - 218
---------------------------------------------------------------------------------------------------------------------
7,301 4,851 12,152 7,629 4,744 12,373
---------------------------------------------------------------------------------------------------------------------
General insurance and health 3
United Kingdom 4 2,370 2,370 2,448 2,448
France 396 396 414 414
Ireland 380 380 333 333
Netherlands 370 370 250 250
Other Europe 110 110 112 112
Canada 585 585 631 631
Other 294 294 293 293
---------------------------------------------------------------------------------------------------------------------
4,505 - 4,505 4,481 - 4,481
---------------------------------------------------------------------------------------------------------------------
Other business 581 581 725 725
Corporate 4 3,176 3,176 2,934 2,934
External debt 5 (1,758) (1,758) (1,749) (1,749)
Internal debt (3,902) (3,902) (3,841) (3,841)
Subordinated debt (2,751) (2,751) (2,814) (2,814)
---------------------------------------------------------------------------------------------------------------------
(4,654) - (4,654) (4,745) - (4,745)
---------------------------------------------------------------------------------------------------------------------
Shareholders' funds, including
minority interests 7,152 4,851 12,003 7,365 4,744 12,109
=====================================================================================================================
Comprising
Equities 3,385 3,385 3,571 3,571
Debt and fixed income securities 7,094 7,094 7,129 7,129
Property 582 582 612 612
Deposits and other investments 1,347 1,347 1,179 1,179
Intangible assets 6 1,721 4,851 6,572 1,811 4,744 6,555
Other net assets 1,434 1,434 1,467 1,467
Borrowings (8,411) (8,411) (8,404) (8,404)
---------------------------------------------------------------------------------------------------------------------
7,152 4,851 12,003 7,365 4,744 12,109
=====================================================================================================================
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PAGE 52
Group capital structure (continued)
Shareholders' funds, including minority interests (continued)
Notes
1. Includes acquired additional value of in-force long-term business of £458 million (31 December 2003: £488 million).
2. The net assets represent the £211 million of goodwill on the RBSG joint venture (31 December 2003: £218 million).
3. The capital employed in the Group's general insurance operations includes £262 million of goodwill (31 December
2003: £392 million).
4. Assets available to shareholders are held by the Group's UK general insurance operations and are available to
finance future growth of the Group. Accordingly, for the purposes of preparing this note, these assets have been
reclassified as Corporate.
5. The external borrowings reported in the summary consolidated balance sheet of £1,769 million (31 December 2003:
£1,760 million) comprise £11 million, (31 December 2003: £11 million) of general insurance borrowings (reported
within the general insurance and health net assets) and £1,758 million (31 December 2003: £1,749 million) of
borrowings by holding companies of the Group not allocated to operating companies (shown as external debt).
6. Comprises £458 million of acquired additional value of in-force long-term business (31 December 2003:
£488 million), £1,052 million of goodwill arising on acquisitions (31 December 2003: £1,105 million) and
£211 million of goodwill on the RBSG joint venture (31 December 2003: £218 million).
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PAGE 53
Group capital structure (continued)
Return on capital employed
Opening
shareholders' funds
Normalised return including minority Annualised
30 June 2004 (Note 1) interests return on capital
---------------------- ------------------- -----------------
Before tax After tax
Note £m £m £m %
Life assurance
United Kingdom 2 356 249 5,891 8.6%
France 114 74 1,449 10.5%
Ireland 18 16 554 5.9%
Italy 34 21 442 9.7%
Netherlands (including Belgium 129 93 2,398 7.9%
and Luxembourg)
Poland 33 27 396 14.1%
Spain 78 50 455 23.2%
Other Europe 7 5 200 5.1%
International 31 22 588 7.6%
--------------------------------------------------------------------------------------------------------------------
800 557 12,373 9.2%
General insurance and health
United Kingdom 3 345 236 2,448 20.2%
France 15 11 414 5.4%
Ireland 68 60 333 39.3%
Netherlands 51 40 250 34.6%
Other Europe 18 13 112 24.6%
Canada 59 40 631 13.1%
Other 24 19 293 13.4%
--------------------------------------------------------------------------------------------------------------------
580 419 4,481 19.6%
Other business 2 1 725 0.3%
Corporate 3, 4 (28) (23) 2,934 (1.6%)
External debt (40) (33) (1,749) 3.8%
Internal debt (100) (70) (3,841) 3.7%
Subordinated debt (84) (59) (2,814) 4.2%
--------------------------------------------------------------------------------------------------------------------
1,130 792 12,109 13.5%
====================================================================================================================
Notes
1. The normalised return is based upon operating profit, including life achieved profit, before amortisation of
goodwill and exceptional items.
2. Shareholders' funds includes £211 million of goodwill on RBSG joint venture.
3. Assets available to shareholders are held by the Group's UK general insurance operations and are available to
finance future growth of the Group. Accordingly, these assets together with their associated pre-tax investment
return of £66 million (post-tax £46 million) have been reclassified as Corporate.
4. The return before tax of £(28) million comprises investment return of £66 million and corporate costs of
£(94) million.
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PAGE 54
Return on capital employed (continued)
Opening
shareholders' funds
Normalised return including minority
31 December 2003 (Note 1) interests (Note 2) Return on capital
---------------------- ------------------- -----------------
Before tax After tax
Note £m £m £m %
Life assurance
United Kingdom 3 659 461 5,243 8.8%
France 220 142 1,221 11.6%
Ireland 65 57 472 12.1%
Italy 70 42 349 12.0%
Netherlands (including Belgium 189 140 1,806 7.8%
and Luxembourg)
Poland 104 76 352 21.6%
Spain 158 102 350 29.1%
Other Europe 9 6 176 3.4%
International 81 56 410 13.7%
--------------------------------------------------------------------------------------------------------------------
1,555 1,082 10,379 10.4%
General insurance and health
United Kingdom 4 608 416 2,052 20.3%
France 44 33 481 6.9%
Ireland 91 78 236 33.1%
Netherlands 74 55 275 20.0%
Other Europe 32 24 63 38.1%
Canada 12 8 535 1.5%
Other 30 27 275 9.8%
--------------------------------------------------------------------------------------------------------------------
891 641 3,917 16.4%
Other business (54) (44) 554 (7.9%)
Corporate 4, 5 (79) (38) 2,475 (1.5%)
External debt (109) (86) (2,053) 4.2%
Internal debt (196) (138) (3,671) 3.8%
Subordinated debt (101) (71) (1,190) 6.0%
--------------------------------------------------------------------------------------------------------------------
1,907 1,346 10,411 12.9%
====================================================================================================================
Notes
1. The normalised return is based upon operating profit, including life achieved profit, before amortisation of
goodwill and exceptional items.
2. Restated for the effect of a change in accounting policy in respect of the treatment of shares held by employee
trusts as a deduction from shareholders' capital.
3. Shareholders' funds include £231 million of goodwill on RBSG joint venture.
4. Assets available to shareholders are held by the Group's UK general insurance operations and are available to
finance future growth of the Group. Accordingly, these assets together with their associated pre-tax investment
return of £81 million (post-tax £57 million) have been reclassified as Corporate.
5. The return before tax of £(79) million comprises investment return of £81 million and corporate costs of
£(160) million.
-----------------------------------------------------------------------------------------------------------------------
PAGE 55
Shareholder information
Aviva Scrip Dividend Scheme
The Aviva Scrip Dividend Scheme (the 'Scheme') provides shareholders with an opportunity, if they wish, to receive new
ordinary shares instead of cash dividends. The Scheme therefore allows shareholders to increase their shareholdings in
Aviva without incurring dealing costs or stamp duty whilst at the same time the cash, which would otherwise have been
paid out in dividends, is retained by the Company for reinvestment in the business. The Scheme replaces the former
Dividend Reinvestment Plan.
Shareholders who wish to join the Scheme need to authorise the Company to issue shares instead of cash for all future
dividends although, shareholders can at anytime cancel their instructions and revert to receiving their dividends in
the form of cash. Shareholders who wish to elect to take new ordinary shares in the Company instead of cash for the
2004 interim dividend must contact Lloyds TSB Registrars at the address opposite and request a mandate form. This must
be completed and returned so that it is received by Lloyds TSB Registrars no later than 5pm on 20 October 2004.
Dividend payments direct to your bank account
Shareholders who wish to continue to receive their dividends in cash, can have dividend payments credited directly
into their bank or building society account on the dividend payment date rather than receiving a cheque. For overseas
shareholders, the Company operates the Transcontinental Account Payment Service which allows shareholders in many
countries to have dividends credited direct to bank accounts in local currencies. To obtain further details and a
mandate form please contact the Company's registrar at the address shown.
Shareview
Shareview is an internet based service that allows shareholders to view their shareholding online and, if they wish,
to receive shareholder communications (e.g. Notice of Meeting, Report and Accounts) via email rather than by post.
To register, please go to www.shareview.co.uk to find more details of the service, practical help and extensive
information on other share registration matters.
Aviva website
Aviva continues to develop its website as an important shareholder communication channel because it is cost efficient,
timely and effective. At present via the Aviva website shareholders can view shareholdings, dividend history, share
purchases and sales and download relevant shareholder forms. To access this facility, shareholders should visit
www.aviva.com/shareholders where full registration details are provided. Those shareholders who have already
registered with the Lloyds TSB Registrars Shareview site can use existing log-in details.
Share price
The current share price of Aviva ordinary shares can be found at www.aviva.com or alternatively, you can call
0906 843 2197*
Share dealing facilities
The Company has arranged the following services that can be used to buy or sell Aviva shares. Alternatively, for
shareholders holding a share certificate any bank, building society or stockbroker offering share dealing facilities
may be used. Shareholders in any doubt about buying or selling shares should seek professional financial advice.
Share dealing facilities for UK shareholders and UK Share Account members
• Shareview Dealing is a telephone and internet service arranged through Lloyds TSB Registrars and provides a
simple and convenient way of selling Aviva shares. For telephone sales call 0870 850 0852 between 8.30am and
4.30pm, Monday to Friday and for internet sales log on to www.shareview.co.uk/dealing
• To buy or sell shares over the telephone, you can contact Barclays Stockbrokers on 0870 549 3001 if you hold a
share account statement, or 0870 549 3002 if you hold a share certificate. Barclays Stockbrokers Limited is a
member of the London Stock Exchange and is authorised and regulated by the Financial Services Authority.
• Natwest Stockbrokers provide a share dealing service at certain branches for Aviva Share Account holders only.
For more information contact Natwest Stockbrokers on 0845 122 0689.
Share dealing facilities for overseas shareholders
To sell shares over the telephone, shareholders can contact Barclays Stockbrokers on + 44 (0)141 352 3959. They will
be able to sell shares and send a sterling cheque for the proceeds.
ShareGift
The Orr Mackintosh Foundation operates a purely voluntary charity share donation scheme for shareholders who wish to
dispose of small numbers of shares whose value makes it uneconomical to sell them. Details of the scheme are available
from ShareGift at www.sharegift.org or by telephoning +44 (0)20 7337 0501 or can be obtained from the Company's
registrar.
Amalgamating your shares
Any shareholders receiving duplicate mailings, i.e. more than one copy of the report and accounts, should contact the
Company's registrar. It may be that they have more than one record of shareholdings which can be amalgamated to prevent
this happening in future.
*Calls are currently charged at 60 pence per minute at all times. The average time to access the share price is
approximately one minute.
Useful contact details
General shareholding administration queries and Aviva Share Account queries:
Lloyds TSB Registrars, The Causeway, Worthing, West Sussex BN99 6DA. Tel: 0870 600 3952
Corporate and single company Peps:
Barclays Stockbrokers Limited, Tay House, 300 Bath Street, Glasgow G2 4LH. Tel: 0870 514 3263
Individual Savings Accounts ('Isas'):
Lloyds TSB Registrars (Isa Manager), The Causeway, Worthing, West Sussex BN99 6DA. Tel: 0870 242 4244.
Internet sites
Aviva owns various internet sites, most of which interlink with each other.
Aviva Group www.aviva.com
UK long-term savings and general insurance www.norwichunion.com
Fund management www.morleyfm.com
Aviva worldwide internet sites www.aviva.com/customers/global.cfm
Group financial calendar for 2004
4 August 2004 Interim dividend announcement
11 August 2004 Ordinary shares quoted 'ex dividend'
13 August 2004 Record date for the interim dividend
20 October 2004 Last date for scrip dividend mandate forms to be received in order to be effective for 2004
interim dividend
29 October 2004 Announcement of long-term savings new business for 9 months to 30 September 2004
17 November 2004 Interim dividend payment date
Corporate social responsibility
Aviva's CSR policy and programme continues to take firmer roots within the business and to generate support with
staff, shareholders and customers. Aviva's CSR performance is also highly ranked by growing numbers of research
agencies and investment houses. It provides one of the pathways by which the Company seeks to achieve its corporate
resolve to be the financial services provider of choice. More details can be found on our website at www.aviva.com/csr
St Helen's, 1 Undershaft, London EC3P 3DQ
Telephone +44 (0)20 7283 2000
Registered in England No. 2468686
For a PDF version of this announcement please go to www.aviva.com
END OF ANNOUNCEMNT
This information is provided by RNS
The company news service from the London Stock Exchange
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